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Cellnet chief denies IBM loss

Cellnet chief denies IBM loss

The distributor's managing director confirms it is looking for a buyer for its Australian IT division

Managing director of embattled distributor, Cellnet (ASX: CLT), has denied industry reports its distribution agreement with IBM has been terminated.

Yesterday, Cellnet announced the sale of its NZ IT division to fellow player, Datastor, and revealed plans to also offload the Australian IT unit. In a phone interview with ARN, managing director, Stuart Smith, confirmed it was working on a sale, but denied speculation that the decision was prompted by the loss of its distribution agreement with IBM.

“We have not received any notification of the end of our agreement with IBM,” he said.

The sale plans were part of ongoing reviews of the business as well as its strategic direction, Smith said.

Cellnet has been contacted by several parties about its IT business, but Stuart admitted it was not in any formal discussions at this stage. The distributor’s biggest IT partner is IBM. It also works with Asus, Acer, Canon, Eaton Powerware and Lexmark. Late last year, the distributor exited the PC and notebook space to focus solely on servers and printers.

Although IT represents a significant proportion of Cellnet’s total revenues, Smith insisted the effect on its bottom line would be negligible.

Smith was hoping for a sale sooner, rather than later. Cellnet’s Australian IT division is manned by 23 staff, while its NZ counterpart had seven.

He said six of its NZ employees had been offered contracts with Datastor, while the seventh was being retained by Cellnet to drive retail business.

“The New Zealand sale is good in that is has released working capital which will be deployed elsewhere in the business,” Smith said. “The fact that the staff have moved across is also a positive. If similar outcomes can be achieved in Australia, that would be great.”


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